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Paying for Room and Board with credit card to earn airline miles? Reimburse self with 529 funds?

PepperJoPepperJo 285 replies10 threadsRegistered User Junior Member
edited August 16 in Parents Forum
Can I do this? Are there any tax implications if I reimburse myself through 529 funds? We file in CA, but daughter will be at school in IL. Assuming school does not charge a fee to use a credit card. Thanks!
edited August 16
14 replies
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Replies to: Paying for Room and Board with credit card to earn airline miles? Reimburse self with 529 funds?

  • cshell2cshell2 439 replies5 threadsRegistered User Member
    Yes. You don't have to pay expenses directly from the 529. You can reimburse yourself.
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  • thumper1thumper1 74357 replies3254 threadsRegistered User Senior Member
    Do check first to see if the school charges a fee for credit card use. Back when my kids started college, some colleges did accept credit cards for payment of tuition, fees, room, board...with no added fee, and some of our friends used that option.

    BUT as time went on, this option was either discontinued altogether ...or a fee was charged %age made it more than just purchasing an airline ticket.

    So...check that first.
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  • momo2x2018momo2x2018 830 replies49 threadsRegistered User Member
    @PepperJo I think I read somewhere that your D's school does not accept credit card payments. I could be wrong, but I think I saw it somewhere...
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  • wis75wis75 14031 replies62 threadsRegistered User Senior Member
    We reimbursed ourselves. The school sent documentation forms every semester that helped come tax time. We also saved receipts for other eligible expenses. The only catch I recall is remembering to do things for a tax (calendar) year and not a school year. Ditto on finding out if credit card usage generates a fee. Plus, plan on paying the credit card balance every month so you don't generate high interest fees.
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  • twoinanddonetwoinanddone 22703 replies15 threadsRegistered User Senior Member
    Neither of my daughters' schools charge a fee for credit card payments the first year, but then one suddenly did the second year with no warning at all. I went online to pay and there was the added fee. Luckily, I had enough money in the bank just to pay it.
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  • thumper1thumper1 74357 replies3254 threadsRegistered User Senior Member
    In many cases...it’s the credit card companies that charge the fee...and the colleges justifiably are not willing to absorb that fee...so they charge you.
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  • OHMomof2OHMomof2 12750 replies236 threadsRegistered User Senior Member
    If your school doesn't take CCs, you might look at something like Plastiq - it lets you pay bills with your card, they send a check. There's a fee but there are specials periodically with fee waivers. I used them to get the required spend for a new card signup bonus with no fees, though even if I'd had to pay the fee it would have been worth it in that case.
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  • RichInPittRichInPitt 807 replies10 threadsRegistered User Member
    edited August 21
    You can certainly pay for it this way without tax implications. I always pay the school directly and then transfer funds from a 529 account at some point during the year, rather than paying the school directly. The 529 payment only needs to be made in the same calendar year. I've taken the full year's amount out in January, and I've waited until December for the full amount - depending on my cash flow/investment mix/etc. needs.

    I haven't used my 2% cash back card because the school charges a 3% credit card fee. If they didn't, I would. I just use EFT instead.
    edited August 21
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  • momo2x2018momo2x2018 830 replies49 threadsRegistered User Member
    I have a question about 529 (tell me if I should start a separate thread)
    In a Bursar's letter from my S's future school today, it was noted that they offer a 9 month payment plan with no interest or increased fees; in this scenario, would it make sense to pay monthly from 529 rather than a lump sum?
    My thinking is over 9-months, the principle will still grow. Thoughts?
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  • PepperJoPepperJo 285 replies10 threadsRegistered User Junior Member
    edited August 23
    @momo2x2018
    Did they break down the monthly payment amount for you already? My D added me as an authorized user for her bursar account but it still shows we have no bill due yet (coming soon according to the email). I was planning on paying quarterly. I saw the monthly option but didn't look any further into it. I'm just wondering if it will be a pain to request direct pay from the 529 to the university if they don't send e-funds. I think my 529 might require a check mailed if I recall correctly, and that could take up to 10 days to process.
    edited August 23
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  • momo2x2018momo2x2018 830 replies49 threadsRegistered User Member
    edited August 23
    @PepperJo No, the monthly payment is not broken down. However, thee is a tab where you can input monthly payments ./. 9 payments. I think if you input a recurring payment of 9 x checks to be sent on a certain date each month, the checks should still get there within the required payment timeframe - and you $ can continue to grow (I think)!
    edited August 23
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  • twoinanddonetwoinanddone 22703 replies15 threadsRegistered User Senior Member
    I think I'd pay twice a year, once per semester. The more payments, the more chances for something to get screwed up.
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  • RichInPittRichInPitt 807 replies10 threadsRegistered User Member
    Depends on where your money is invested and your risk tolerance. If it’s just in a guaranteed interest earning account, then certainly spread it out - it’s free money. If you are in equities, bonds, etc., then you’re just betting on the market, which depends on your risk appetite.
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